System 5 included further operating system improvements and arrived in 1989.
System 5.0.4, a general bug fix release, was released a year later.

The most noticeable thing when you begin to use system 5 over previous versions
of the operating system is the increased speed of screen redraws - windows
fly open and pull down menus zip down. Loading times were again improved over
System 4, thanks largely to the 'Express Load' component new to System 5. 'Express
Load' worked best when programs were written to take advantage of it and was
a clever form of caching that took advantage of extra memory if it was available.

The operating system included many other refinements, perhaps most requested
up to that point, and attempted by shareware authors before System 5, was a
graphical control panel alternative to the text mode based version accessed
by the apple, control and escape keys. Control panels could be added to the
system by way of the CDEV format, which gave third party developers new ways
to extend the functionality of the OS.

There were lots of other smart improvements - scrolling pull down menus, which
for instance, could accommodate a larger list of fonts than the height of the
screen. Filenames can now include upper and lowercase characters. AppleSharing
was now fully functional. GS/OS would remain in memory even when a ProDOS 8
program was being used, so when you returned to the Finder, the OS wasn't required
to be reloaded all over again. And yet another speed increase was added to
file and volume copying.

System 5.04 is probably the best operating system for use with IIGS machines
that include no more than 1.25meg of RAM. With 2 meg of RAM or more, System
6.01 would be your ideal OS of choice on the IIGS.